Rudrabhishek Enterprises limited is mainly into integrated urban development and Infrastructure consultancy. They deliver end-to-end consultancy in diverse sectors. They manage projects from the ideation stage and carry it through planning, designing, execution, and marketing.

Company’s integrated services include

1. Infrastructural services

2. Urban designing and planning

3. Global information systems

4. Building designing services

5. Project management services

Now you don’t need to know a lot about what exactly each service includes, apart from the fact that their work is mostly restricted to Infra Consultancy.

The company was incorporated in 1992 by Mr Pradeep Sharma. And during the 25 years, the company has in fact grown considerably. They have a rather impressive list of government and corporate clients, rich experience in the sector and several large projects under their belt.

DECLINING PERFORMANCE

But their recent performance has been largely unremarkable. The company’s top/bottom line has declined in the past couple years and we don’t have clarity on why this is perhaps the case. One could put this down to the slump in the Infrastructure space or down to the uncertain nature of consulting businesses (You have to be on the constant lookout for new projects in order to improve your top line)

So, the company’s revenues and their profits don’t inspire a lot of confidence and then there is the small matter of the promoter.

DISQUALIFICATION OF DIRECTOR

Mr. Pradeep Mishra was disqualified from acting as a director for the period (Nov 2014 to Oct 2019) due to non-filing of annual reports or financial statements of Silver Sand Corporation Limited for a period of 3 fiscal years i.e. 2012 to 2015. However, he continues to be the managing director at REPL.

32 GROUP COMPANIES?

Also, the company is part of a conglomerate that has a whopping 32 group companies in total. This includes 6 subsidiaries/Associate companies, of which 4 companies have been de-subsidized recently because they were making losses.

Related party transactions between Rudrabhishek and other group companies aggregate up to about 21 Crores as of December 2017 and the company borrowed up to 7 Crores from companies where the promoters still hold significant stake. Now, all these are perfectly legal transactions, but we thought we should just point this out because of the sheer scale of some of these numbers.

A TURN AROUND IN THE CARDS?

The company has a few things going for it though, in that it has an order book of Rs. 211 Crores. And in line with the order book, the company has projected its working capital requirements for FY 2018-19 and its more than double their requirement for the year FY 2017-18. Their requirement during FY 2017-18 was 23 Crores and the belief is that it will need about 52 Crores for the next year. So that’s where your money is going.

The company wants to fund its working capital requirements through IPO proceeds and Internal Accruals. The company also believes that during this expansion spree, their sales is bound to jump from 38 Crores (FY-18 Estimates) to about 65 Crores (FY-19 Estimates).

Now, in the off chance that the company successfully executes its order book and makes reasonable investments, maybe the company could turn its fortunes around. But, based on their recent performance, perhaps it’s a bit too optimistic to think that the company will suddenly start posting stellar numbers. Investors must exercise some caution in interpreting these numbers.

ISSUE PRICE

Based on annualized earnings, the company will be listed at a PE of about 27 against an industry average of 41. It must also be noted that the company’s peers are trading at lower PE multiples despite showing comparable or in some cases better performance than Rudrabhishek. At a fixed price of Rs.41 per share the company plans to mobilize Rs.18.73 Crores and we wish the company the best of luck in its future endeavor.

No content on this blog should be construed to be investment advice. You should consult a qualified financial advisor prior to making any actual investment or trading decisions. All information is a point of view, and is for educational and informational use only. The author accepts no liability for any interpretation of articles or comments on this blog being used for actual investments.